Question

Sensitivity analysis:A. looks at the most reasonably optimistic and pessimistic results for a project.B. helps identify the variable within a project that presents the greatest forecasting risk.C. is generally conducted prior to scenario analysis just to determine if the range of potential outcomes is acceptable.D. illustrates how an increase in operating cash flow caused by changing both the revenue and the costs simultaneously will change the net present value for a project.

Answer 1

B. helps identify the variable within a project that presents the greatest forecasting risk.

Step-by-step explanation:

Sensitivity analysis -

It is the method which enables to determine the alterations in the assumptions used for any forecasts , is known as the Sensitivity analysis .

This method is used for sales and profit forecasting , investment appraisal and in various other aspects of the business management .

hence , from the question , the correct statement regarding Sensitivity analysis is ( B. ) .